Economists agree that a. neither high inflation nor moderate inflation is very costly. b. both high and moderate inflation are quite costly. c. high inflation is costly, but they disagree about the costs of moderate inflation. d. moderate inflation is as costly as high inflation.

Question

Ryan Lowery

Business

28 September, 10:34

Economists agree that a. neither high inflation nor moderate inflation is very costly. b. both high and moderate inflation are quite costly. c. high inflation is costly, but they disagree about the costs of moderate inflation. d. moderate inflation is as costly as high inflation.

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Answers (1)

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Jonathan Cantrell · Answer 1

High inflation is costly, but they disagree about the costs of moderate inflation.

Explanation:

Inflation can be defined as the persistence rise in the price of goods and services. Inflation leads to a decline in the value of money this means that individuals may no longer to buy enough thing with the same amount of money which is previously enough to buy the things needed. The rise in the price of goods will equally mean inability to purchase the normal quantity of goods.

The main causes of inflation are demand pull and cost push. Demand pull occurs when manufacturers increase their prices due to the increase in demand for their products. Cost push occurs when manufacturers increase the prices of their products because the costs have also increased.